Federal regulators want to crack down on “free lunch” investment seminars, where high-pressure sales tactics often cause retirees to make unwise investment decisions.

According to the AARP, three out of five investors over age 60 received six or more invitations to a free investment seminar in the past three years. A free meal (and, often, door prizes) are used to boost attendance, but those who do attend are often subjected to inflated claims by seminar presenters, who suggest they’ll reveal the secret to eliminating taxes, investing without risk or tripling earnings. Attendees are strongly encouraged to bring their spouses.

The Securities and Exchange Commission (SEC) and other regulators sent investigators to sit in on seminars. “Their findings,” the AARP story said, “were deeply disturbing.”

“Every rock that we turned over seemed to have a bug or a worm crawling out underneath,” SEC Chairman Christopher Cox said. “In each of the sweeps we conducted, we found significant fraud.”

The real goal of the seminars, of course, is to sell investment products, and to do so, the companies sponsoring the seminars may misrepresent their products (e.g., “The risk is low” or “People are making a lot of money from similar investments”) and use overly aggressive tactics (e.g., “You have to decide today”). These include follow-up home visits, phone calls and a hard sell intended to make seminar attendees buy the product quickly.

Regulators, however, have limited staffing and need your help. The AARP is recruiting seminar monitors who are willing to attend free lunch investment seminars, collect handouts distributed during the presentation, and complete an AARP questionnaire about their experience. The AARP will make sure the monitors’ comments get forwarded to state regulators.

Hard times really seem to bring out con artists ⎯ even those wearing a suit and tie ⎯ who count on people’s willingness to believe exaggerated claims that they can profit with virtually no risk. Kind of reminds me of sub-prime mortgage lenders.